Chapter 8 Accounting for Receivables（应收款项会计）.ppt

Allowance Method (備抵法) Losses are estimated: Better matching. Receivable stated at cash realizable value. Required by IFRS. Debt balance (Allowance account) Sale of Receivables Advantages of Credit Cards Notes Receivable Company Factor (Bank) Account Receivable Cash Customer Selling account receivable Charges a commission fee (1-3%) Account Receivable Factor (應收帳款管理公司) Finance company or bank. Buys receivables from businesses and then collects the payments directly from the customers. Typically charges a commission to the company that is selling the receivables. Fee ranges from 1-3% of the receivables purchased. Sale of Receivables Accounts Receivable Illustration: Assume that Tsai Furniture factors NT$600,000 of receivables to Federal Factors. Federal Factors assesses a service charge of 2% of the amount of receivables sold. The journal entry to record the sale by Tsai Furniture is as follows. Accounts Receivable 600,000 Cash 588,000 Service Charge Expense (I/S) 12,000 (NT$600,000 x 2% = NT$12,000) Accounts Receivable Visa, MasterCard, American Express Recorded the same as cash sales. Retailer pays card issuer a fee of 2 to 6% for processing the transactions. Accounts Receivable Credit Card Sales(信用卡銷貨): Illustration: Lee Co. purchases NT$6,000 of music downloads for its restaurant from Yang Music Co., using a Visa First Bank Card. First Bank charges a service fee of 3%. The entry to record this transaction by Yang Music is as follows. Sales Revenue 6,000 Cash 5,820 Service Charge Expense 180 Accounts Receivable Companies may grant credit in exchange for a promissory note (本票). A promissory note is a written promise to pay a specified amount of money on demand or at a definite time. Promissory notes may be used when individuals and companies lend or borrow money, when amount of transaction and credit period exceed normal limits, or in settlement of accounts receivable. Notes Receivable (應收票據) Illustration 8-11 To the Payee (受款人), the promisso